Ghana: Collapse of 2 banks, concerns about assets declaration reported in Ghana

Accra, Ghana (PANA) – The collapse of two Ghanaian-owned banks announced on Monday sending shockwaves across the country and concerns about an “ineffective” assets declaration law for state officials were some of the stories reported this week.

Some people in the financial sector saw the collapse of UT Bank and Capital Bank coming, but for many others, including their customers, it came as a surprise. Their only consolation is a promise by the Bank of Ghana (BoG), the central bank, that their deposits are safe, but shareholders will not be so lucky.

This is because the two banks have been taken over by GCB Bank, the state-owned commercial bank, the second biggest bank.

“BoG probes UT, Capital Bank directors for roles in collapse of their banks,” was the headline of the state-owned Graphic newspaper on Tuesday.

It said BoG, which had revoked the licences of the banks because of their “terrible financial situation” had begun a forensic audit into the operations of the two insolvent banks and their directors to unravel the factors leading to their collapse.

The audit will seek to ascertain the banks’ compliance with the rules of corporate governance and adherence to proper financial administration.

The newspaper reported that the Governor of the BoG, Dr Ernest Addison, said on Monday that those who breached the corporate governance and financial rules of the banks would face punitive sanctions.

“The last phase of the BoG’s action will involve a thorough investigation of the operations of the UT Bank and the Capital Bank and appropriate action will be taken against shareholders, directors and key management personnel who are found to be culpable,” he warned.

The liquidation of the UT and the Capital banks became necessary in order to protect depositors’ funds owing to the "severe impairment" of their capital, the central bank said.

The liquidation formed part of prior actions agreed with the International Monetary Fund (IMF) ahead of the next review of Ghana's three-year aid programme at the end of August.

“2 Banks Crash! Customers panic over takeover,” was the headline of the pro-government Daily Guide which reported that the two troubled financial institutions were on Monday compulsorily taken over by GCB Bank following the revocation of their licences by the Bank of Ghana.

The Central Bank said the acquisition was in line with the Banking Act, which granted it the authority to revoke the licence of any bank that is deemed to be in financial distress.

The unannounced action, which was carried out to prevent mass withdrawal by depositors, caused fear and panic among customers, with the BoG giving the assurance that there was no cause for alarm and that their investments were safe.

The newspaper immediately the announcement was made, the two banks were rebranded with the GCB Bank logo.

The Ghana Stock Exchange (GSE) has also suspended the listing status of UT Bank Limited with effect from Monday saying the decision was taken following the failure of the UT Bank to publish its financial results since the end of its financial year – December 31, 2015.

The Minority in Parliament in its view are demanding a bi-partisan probe into the circumstances surrounding the collapse of the banks.

Cassiel Ato Forson who is the Minority spokesperson on Finance suspects something untoward may have happened and demanded investigations into it.

He said the managers of the two banks must be dealt with if they are found culpable of any wrongdoing.

The fate of the workers will be decided after skills assessment has been done by the new owners.

The Graphic in another story reported that the fate of shareholders and investors in the defunct UT Bank hanged in the balance because it was not clear what had become of their investments.

It reported that it had now emerged that PricewaterhouseCoopers (PwC), the international auditing and accounting firm contracted to dispose of the assets of the two bank, would have to first sell all the assets of the banks and settle their creditors before distributing the surplus, if any, to investors and shareholders of the bank.

In the event that nothing is left after settling all the creditors, shareholders and investors will not receive anything.

“Assets Declaration Act is a joke - Speakers at IEA forum,” was the headline of the Graphic about concerns of the ineffectiveness of the law.

The newspaper said speakers at a forum on fighting corruption in the public sector described the content of the Assets Declaration Act, 1998 (Act 550) as a joke, saying it was not tight and robust enough to fight corruption in the public service.
According to them, the Act, in its current state, could best be described as non-existent, since it was plagued with numerous weaknesses that made the fight against corruption nothing but a mirage.

Making separate statements at a roundtable organised by the Institute of Economic Affairs (IEA) in Accra on Tuesday, the speakers called for a holistic national discourse involving all key stakeholders to initiate a process to address the weaknesses in the act.

The speakers were a former Commissioner of the Commission on Human Rights and Administrative Justice (CHRAJ), Mr Justice Emile Short; a former Auditor-General, Professor Edward Dua Agyeman, and the incumbent Auditor-General, Mr Daniel Domelevo, and they were all unanimous that the current assets declaration regime was not an efficient tool to fight corruption.

The newspaper quoted Prof. Dua Agyeman as saying that one major weakness in the Asset Declaration Act was the lack of public disclosure of the declared assets of public officials.

"The current law does not even allow the Auditor-General, who is the custodian of filled asset declaration forms, to know the content of the forms. The law requires that the forms are sealed in an envelope and presented for storage, which means that until such a time that there is a legal process to open a specific envelope; one cannot even tell if the assets have been properly declared.”

He called for the law to be amended so that the declared assets by public office holders can be published for the public to know and cross-check if there was any false declaration.
-0- PANA MA 19Aug2017

19 august 2017 00:23:50

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